is unlikely that the final regulations
will be published in time for plan sponsors to make plan design decisions
accordingly, before expiration of the
relief provided under the two notices.
For that reason, the IRS and Treasury Department felt it appropriate to
extend the relief for an additional year.

Morningstar and PrudentialDeny Racketeering

Another Employee Retirement Income
Security Act (ERISA) lawsuit has
emerged in federal court, this one
naming both Morningstar and various
Prudential companies as defendants in
the U. S. District Court for the Northern
District of Illinois.

The case is unique because it cites
both the Employee Retirement Income
Security Act (ERISA) and the Racketeer
Influenced and Corrupt Organizations
Law of 1970, known as RICO. The lead
plaintiff in the would-be class action
suit is an employee of Rollins Inc. and
a participant in the Rollins retirement
plan. The Rollins plan is a defined
contribution (DC) plan with assets of
roughly $500 million and more than
10,000 participants and beneficiaries,
case documents show. Defendants
are investment analysts, investment-related software developers, investment consultants, recordkeepers and
investment managers with respect to
the Rollins plan and other 401(k) retirement plans across the country.

Specifically, the suit focuses on the
various groups that manage the plan-participant-level automated investment advice program marketed under
the trade name GoalMaker.

“Plaintiff and the other participants
in the plans used and were injured by
this innocuous-sounding investment
advice program, which in reality was
a predatory racketeering enterprise
developed, maintained and marketed
by defendants,” the suit contends.

“Defendants’ so-called investmentadvice program gets retirement planinvestors to turn over the investmentmanagement of their plan accounts todefendant PRIAC. PRIAC, along with itscorporate siblings [that] facilitated theinstant racketeering scheme, is a corepart of the RICO racketeering enter-prise at issue here.”It should be noted straightaway thatboth Prudential and Morningstar havefiled extensive responses to the suit,denying the charges here describedand requesting summary judgmentagainst the plaintiff. It is also relevantto observe that the GoalMaker producthas been challenged unsuccessfullyin a federal district court before by adisgruntled participant.

Lawsuit Against Deutsche Bank
A federal district court judge has
granted class certification to a sizable
group of Deutsche Bank employees
who have filed an Employee Retirement
Income Security Act (ERISA) challenge,
alleging self-dealing in the company’s
retirement plan benefit.

The now class-certified case
comes out of the U.S. District Court
for the Southern District of New York.
The underlying allegations are that
Deutsche Bank and other defendants
violated their fiduciary duties by
offering, in the company 401(k) plan,
proprietary, high-cost investments
that profited the bank. This development comes nearly a year after the
court rejected defendants’ argument
that the lawsuit, filed in December
2015, should be time-barred by ERISA’s
various statutes of limitation. The
bank otherwise denies the allegations.

DOL Secretary UrgedTo Call for Auto-Portability

In a letter to Department of Labor
(DOL) Secretary R. Alexander Acosta,
U.S. Senator Tim Scott, R-South Carolina, and other lawmakers requested
that the agency issue an advisory
opinion or other appropriate guidance regarding application of the
Employee Retirement Income Security
Act (ERISA) to automatic portability of
retirement savings.

The letter notes, “Retirement plancash leakage at the time of job changeis harmful to workers’ retirement.”It cites an Employee Benefit ResearchInstitute (EBRI) analysis, which foundthat a clearinghouse that could auto-matically roll over a participant’sretirement plan balance to a newemployer every time he changed jobswould result in an additional $2 trillionin retirement savings for all employees,nationwide, by age 65.

A demonstration for PLANADVISER
by Retirement Clearinghouse showed
that, in just over 30 years, total cash-outs could reach $282 billion, and rollovers to other qualified plans would
be only $14.7 billion among 8. 4 million
participants. The firm’s analysis did
not include appreciation, so these
amounts would be larger if average
returns were included. If auto-portability were available, in just over 30
years, cash-outs would be reduced
to $144.3 billion, and rollovers would
be $133.5 billion among 77.5 million
participants.

In the letter, lawmakers ask that
Acosta use all of the resources at his
disposal to ensure the DOL examines the issue of auto-portability and
provides guidance as soon as possible.

Hurricane Harvey ReliefFollowing up on a previous announce-ment, the Pension Benefit GuarantyCorporation (PBGC) has shared moredetail about its intent to waive certainpenalties and extend certain filingdeadlines in response to the HurricaneHarvey disaster in Texas and Louisiana.Technically speaking, this disasterrelief announcement provides reliefrelating to PBGC deadlines to “desig-nated persons.” A “designated person”is defined as “any person responsiblefor meeting a PBGC deadline (e.g., a planadministrator or contributing sponsor)that is located in the disaster area forwhich the Internal Revenue Service(IRS) has provided relief in TX-2017-09,in connection with filing extensionsfor Form 5500 series returns, or cannotreasonably obtain information or otherassistance needed to meet the deadlinefrom a service provider, bank, or otherperson whose operations are directlyaffected by the severe storms andflooding from Hurricane Harvey thatbegan on August 23, 2017, in Texas.”

In TX-2017-09, the IRS provides
relief for taxpayers who reside or have
a business in the disaster area and,
who because of the disaster, needed
extensions for filing Form 5500 series
returns. —PA